RenaissanceRe Holdings Ltd. (RNR)

RNR 
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RenaissanceRe Holdings Ltd. (RNR)

Q4 2011 Earnings Call

February 8, 2012 09:00 a.m. ET

Executives

Peter Hill – Investor Relations, Kekst and Company

Neill A. Currie – President and Chief Executive Officer

Kevin J. O'Donnell – Executive Vice President, Global Chief Underwriting Officer

Jeffrey D. Kelly – Executive Vice President and Chief Financial Officer

Analysts

Keith Walsh – Citigroup

Joshua Stirling – Sanford Bernstein

Vinay Misquith – Evercore Partners

Michael Zaremski – Credit Suisse

Joshua Shanker - Deutsche Bank

Michael Nannizzi - Goldman Sachs

Doug Mewhirter - RBC Capital Markets

Presentation

Operator

Good morning, my name is Natalia and I will be your conference operator today. At this time, I would like to welcome everyone to the RenaissanceRe Fourth Quarter 2011 Financial Results Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

I would now like to turn the call over to Mr. Peter Hill. You may begin sir.

Peter Hill

Good morning, and thank you for joining our fourth quarter 2011 financial results conference call. Yesterday after the market closed, we issued our quarterly release. If you didn't receive a copy, please call me at 212-521-4800, and we will make sure to provide you with one.

There will be an audio replay of the call available from approximately noon Eastern Time today through midnight on February 29. The replay can be accessed by dialing 855-859-2056 or 404-537-3406. The pass code you will need for both numbers is 44625687. Today's call is also available through the Investor Information section of www.renre.com and will be archived on RenaissanceRe's website through midnight on April 19, 2012.

Before we begin, I am obliged to caution that today's discussion may contain forward-looking statements and actual results may differ materially from those discussed. Additional information regarding the factors shaping these outcomes can be found in RenaissanceRe's SEC filings to which we direct you.

With me to discuss today’s results are Neill Currie, Chief Executive Officer; Jeff Kelly, Executive Vice President and Chief Financial Officer; and Kevin O'Donnell, Executive Vice President and Global Chief Underwriting Officer.

I'd now like to turn the call over to Neill. Neill?

Neill Currie

Thank you, Peter. Good morning everyone and thank you for joining us today. 2011 proved to be one of the worst years on record for insured catastrophe losses. And as one of the largest participants in the property catastrophe reinsurance marketplace, our results for the year reflected this. I am pleased to say that we were able to achieve positive operating results for the fourth quarter, even though the industry continued to experience significant global insured catastrophe losses.

We had good underwriting results and a rebound in investment income during the quarter. We recorded an annualized operating return on equity of 7.7% for the quarter and an increase in book value per share of 2.4%.

For the full year however, the company sustained its second operating loss since 1993, the year we were founded. With an operating return on equity of negative 5.3% and a decline intangible book value per share plus the change in accumulated dividends of 1.8%.

Given the extent of loss activity over the last year I believe RenaissanceRe performed admirably in 2011. Through the earthquakes, tornadoes and floods, and the economic volatility that has dominated the news we calmly said about serving our clients. We paid claims promptly, quickly assessed our losses, and incorporated new learnings from each event and returned to the market equipped with new information and insights.

Our losses were within our expectations and well within our risk tolerances. We managed the company to be able to withstand multiple extreme events in one year and this was illustrated last year in 2011 as it was in 2005. No one event alone would have caused us to lose money during either of those years which included record losses such as hurricane Katrina and the Tohoko earthquake.

We absorbed changes to natural catastrophe models quickly and we’re able to share our insights with our clients. We [indiscernible] protection for existing clients and others seeking solutions to their problems. Consequently, we were rewarded with strong January 1 renewals and the ability to build an attractive portfolio of business. As we were expecting the property catastrophe market continued to indicate signs of gradual firming driven by the catastrophe losses incurred during the year, learnings from those losses, and to some degree by the new model releases. We do expect to see these drivers continue to play out in the months ahead.

I’m pleased with the continuing evolution of our specialty reinsurance operation and our Lloyd's syndicate. Both operations have great teams and I am confident in their ability to contribute significantly to RenaissanceRe over the coming years.

Our joint ventures Top Layer Re and DaVinci Re demonstrated their value to our franchise once again during 2011. Top Layer Re incurred losses as a result of the New Zealand earthquake and the Tohoku earthquake, and was there to accept renewal business for our clients when they needed protection. For DaVinci as well as achieving a successful capital raise back in June, we were able to further diversify our investor base and bringing in three new long term partners effective 11. DaVinci continues to be a key element of our strategy in our ability to manage our net risk by attracting external investors.

In addition, we were able to attract capital into new retro side car Upsilon Re which we established for January 1 to write aggregate retro session protection. This vehicle is already proving to be successful and offers the flexibility to be scaled up as opportunities warrant.

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